Virgin Blue announces former Qantas exec, John Borghetti, as new CEO

Analysis

Virgin Blue appointed John Borghetti as the company’s new CEO and Managing Director, effective 08-May-2010, replacing outgoing CEO Brett Godfrey. Mr Borghetti resigned from Qantas in May-2008 after 36 years at the carrier. Mr Borghetti was among a handful of employees tipped to replace Geoff Dixon in Nov-2008, with the Qantas CEO job going to then Jetstar CEO, Alan Joyce.

Coup for Blue

Virgin Blue Chairman, Neil Chatfield, stated, "we are delighted to have John join us. He is a highly regarded executive with deep aviation experience and insights, proven strategic capabilities and strong marketing credentials. Nobody knows the market better and he is passionate about the aviation business".

Mr Borghetti stated he feels "privileged" to have been selected as the new leader of Virgin Blue, noting, "it’s a great business with a great team and great culture – you can feel the energy in the people and the brand". He added, "the company is in good shape and is exceptionally well placed to build on its strengths and embrace revenue growth opportunities ahead. I look forward to working with the team to create an even more competitive environment for air travellers – domestic and international".

While the broad terms of Mr Borghetti’s employment have been agreed, various terms of the incentive components of his remuneration are still being finalised.

Mr Borghetti's intimate knowledge of Qantas' operation will be highly valuable to Virgin Blue, which is seeking a greater slice of the lucrative corporate and government travel market.

Virgin Blue currently has a 15-18% share of the Australian Government’s AUD500 million annual travel budget. Mr Godfrey told AAP last week, "we carry high but, I think, justified expectations that with the soon-to-be-announced government tender that we are going to get a much fairer share of that traffic". He added, "if we're valid for 30% of Australian taxpayers we should be valid for at least 30% of federal government travel. That may be a couple of years down the track, but we certainly should see an improvement on that number that we are currently getting. We don't expect to get there in one jump".

An announcement regarding recipients of the government travel tender is expected in three to four weeks.

Tributes to Godfrey

In Jul-2009, Mr Godfrey announced his intention to step down from the leadership role this year.

Mr Chatfield paid tribute to Mr Godfrey's leadership over the last ten years. He stated, "today, Virgin Blue has a credible market position with a solid balance sheet and has the scale and momentum for further growth, despite the enormous challenges faced by the industry in recent years". Mr Chatfield added, "Brett has been an inspirational leader to the Virgin Blue team and we sincerely thank him for his extraordinary dedication and talent. We also appreciate that he has agreed to be available to work with John to ensure a smooth transition.”

As CAPA stated in Peanuts Weekly last July, the timing is appropriate for Mr Godfrey to transfer the leadership, noting, "Brett is one of the longest serving heads of an LCC anywhere in the world, which is a tribute to his perseverance, and he leaves voluntarily, not a common feature. He has weathered some difficult boards, multiple ownership fluctuations and some tough external pressures - yet throughout managed to maintain a reasonably consistent thread of logic behind the development of the airline".

"Under his guidance, Virgin Blue became a formidable force. He can justly claim much of the credit for developing Virgin Blue from a couple of leased B737-400s in 2000 into an international airline with an annual turnover of nearly AUD3 billion. That makes him one of a very select group in the aviation world. Australia has produced some notable airline leaders and, although Mr Godfrey is rarely accorded the stature of sometimes ordinary leaders of competing carriers, his achievements speak for themselves", said CAPA.

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